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Exercises
Direction: Read and understand each of the statements given. Write only your final answer and send it as a private
message through messenger. If you are using Google forms, choose the option that best corresponds to your answer. For
supply the answer questions, write only the final answer. Keep your solutions with you. We will compare it with the
solution that I will send you after your submission. Theory questions (1 point) Problem solving multiple choices and
supply the answer (2 points)
1. Agree or Disagree? I have read and understood the lesson about standard costing.
2. Agree or Disagree? I answer all the activities on my own with complete solution per each problem.
3. Both standard costs and budgeted costs are used for controlling costs. However, the two terms are not the same.
Standard costs differ from budgeted costs in that standard costs
a. Are based on engineering studies while budgeted costs are historical costs
b. Costs that were incurred for actual production, while budgeted costs are costs that should have been incurred for
such production
c. Are costs that should have been incurred for actual production, while budgeted costs are costs that should be
incurred for budgeted or planned production
d. Are always expressed in total amounts, while budgeted costs are always expressed in per-unit amounts
4. The following describe ideal standards, except
a. Currently attainable standards
b. Theoretical or maximum-efficiency standards
c. Make no allowance for waste, machine downtime, and spoilage
d. Perfection standards
5. A standard cost is an estimate of what a cost should be under normal operating conditions. In establishing standard
costs, the following organizational personnel may be involved, except
a.
8. The materials price variance for the units used in November was
9. In a standard costing system, actual costs are compared with standard costs. The difference or variance is determined,
and responsibility for such variance is assigned or identified to a particular person or department, in order to
a. Determine who is at fault and render the appropriate punishment
b. Be able to set the correct selling price of the product
c. Use the knowledge about the variances to promote learning and continuous improvement in the manufacturing
operations
d. Trace the variances to the proper inventory accountants so that they may be valued at actual costs
10. The materials mix variance for a product is P 450 unfavorable and the materials yield variance is P 150 unfavorable.
This means that
a. The materials price variance is P 600 unfavorable
b. The materials quantity variance is P 600 unfavorable
a. Favorable c. Zero
b. Unfavorable d. The same amount as the labor efficiency variance
12. Under a standard cost system, the materials efficiency variances are the responsibility of
13. A favorable materials price variance coupled with an unfavorable materials usage variance would most likely result
from
a. Machine efficiency problems
b. Product mix production changes
c. Labor efficiency problems
d. The purchase of lower-than-standard-quality materials
14. Which of the following is the most probable reason a company would experience an unfavorable labor rate variance
and a favorable labor efficiency variance?
a. The mix of workers assigned to the particular job was heavily weighted towards the use of highly paid
experienced individuals
b. The mix of workers assigned to the particular job was heavily weighted towards the use of new relatively low
paid unskilled workers
c. Because of the production schedule workers from other production areas were assigned to assist this particular
process
d. Defective materials caused more labor to be used in order to produce a standard unit
16. Under the three variance method for analyzing factory overhead, which of the following is used in the computation of
the spending variance?
Budget allowance based on standard hours Factory overhead applied to production
a. Yes Yes
b. Yes No
c. No Yes
d. No No
17. What is the normal year end treatment of immaterial variances recognized in a cost accounting system using standard
costs?
a. Reclassified as deferred charges until all related production is sold
b. Allocated among cost of goods manufactured and ending work in process inventory
c. Closed to cost of goods sold in the period in which they arose
d. Capitalized as a cost of ending finished goods inventory
For questions 18 to 25
Villaverde Corporation’s standard cost system contains the following overhead costs, computed based on a monthly
normal volume of 25,000 units or 50,000 direct labor hours:
a. P 0 c. P 17,000 unfavorable
b. P 8,000 unfavorable d. P 25,000 unfavorable
28. For the month of April, Thorp Company’s records disclose the following data relating to direct labor:
Actual cost P 10,000
Rate variance 1,000 favorable
Efficiency variance 1,500 unfavorable
Standard cost P 9,500
For the month of April,, actual direct labor hours amounted to 2,000. In April, Thorp’s standard direct labor rate per
hour was _____.